(Pro-rata allotment in different ratio).
ABC Ltd., issued a prospectus inviting applications for 1,00,000 shares of Rs.10 each. These shares were issued at par on the following terms:
On applicatio Rs.3
On allotment Rs.4
On 1st call Rs.2 and
On final call the balance.
applications were received for 1,20,000 shares. Allotments were made on the following basis:
- To applicants for 20,000 shares-in full;
- To applicants for 40,000 shares-30,000 shares;
- To applicants for 60,000 shares-50,000 shares;
All excess amount paid on application is to be adjusted against amount due on allotment.
The shares were fully called and paid up except amount of allotment, 1stand final call not paid by those who applied for 4,000 shares out of the group applying for 40,000 shares.
All the shares on which calls were not paid were forfeited by the Board of Directors.
2,000 forfeited shares were reissued as fully paid on receipt of Rs.8 per share.
Show the Journal Entries in the books of ABC Ltd.
Please also show the working notes of it.
Journal | |||||
Date | Particulars | L.F. | Debit Amount (Rs) | Credit Amount (Rs) | |
Bank A/c | Dr | 3,60,000 | |||
To Share Application A/c | 3,60,000 | ||||
(being application money received on 1,20,000 shares) | |||||
Share Application A/c | Dr | 3,60,000 | |||
To Share Capital A/c | 3,00,000 | ||||
To Share Allotment A/c | 60,000 | ||||
(being application money on 1,00,000 shares transferred to share capital, excess amount adjustment towards allotment ) | |||||
Share Allotment A/c | Dr | 4,00,000 | |||
To Share Capital A/c | 4,00,000 | ||||
(being share allotment due on 1,00,000 shares) | |||||
Bank A/c | Dr | 3,31,000 | |||
To Share Allotment A/c | 3,31,000 | ||||
(being allotment amount received) | |||||
Share First Call A/c | Dr | 2,00,000 | |||
To Share Capital A/c | 2,00,000 | ||||
(being share first call due on 1,00,000 shares) | |||||
Bank A/c | Dr | 1,94,000 | |||
To Share First Call A/c | 1,94,000 | ||||
(being share first call received) | |||||
Share Second Call A/c | Dr | 1,00,000 | |||
To Share Capital A/c | 1,00,000 | ||||
(being share second call due on 1,00,000 shares) | |||||
Bank A/c | Dr | 97,000 | |||
To Share Second Call A/c | 97,000 | ||||
(being share second call received) | |||||
Share Capital A/c | Dr | 30,000 | |||
To Share Allotment A/c | 9,000 | ||||
To Share First Call A/c | 6,000 | ||||
To Share Second Call A/c | 3,000 | ||||
To Share Forfeiture A/c | 12,000 | ||||
(being 3,000 shares forfeited for non payment of allotment and calls) | |||||
Bank A/c | Dr | 24,000 | |||
Share Forfeiture A/c | Dr | 6,000 | |||
To Share Capital A/c | 30,000 | ||||
(being forfeited shares reissued at 8 per share fully paid up) | |||||
Share Forfeiture A/c | Dr | 6,000 | |||
To Capital Reserve A/c | 6,000 | ||||
(being share forfeiture transferred to Capital Reserve account) | |||||
Working notes:
Excess amount received on application adjusted towards allotment:
Application money received on 1,20,000 shares= 1,20,000 shares * 3 = Rs 3,60,000
Actual application money on 1,00,000 allotted shares = Rs 3,00,000 (1,00,000 shares * 3)
Excess received and adjusted towards allotment = Rs 60,000 (Rs 3,60,000 - Rs 3,00,000)
Amount Received on allotment:
Due amount on allotment = 1,00,000 * 4 = Rs 4,00,000
Excess already received = Rs 60,000
Shareholders who applied for 4,000 shares were allotted only 3,000 shares (4,000*3/4)
On 4,000 shares application money received = Rs 12,000 (4,000*3)
Amount transferred to share capital on 3,000 shares = 3,000*3 = Rs 9,000
Excess money on application = Rs 3,000 (Rs 12,000-Rs 9,000)
Allotment due on 3,000 shares = 3,000*4= Rs 12,000
Less Excess money on Application = Rs 3,000
Amount of allotment not received on 3,000 shares = Rs 9,000
Total amount received on allotment= Rs 4,00,000 - Rs 60,000 - Rs 9,000 = Rs 3,31,000
Amount received on first call
Due amount on first call = 1,00,000*2 = Rs 2,00,000
Not received on 3,000 shares = 3,000*2 = Rs 6,000
Total amount received on first call = Rs 2,00,000- Rs 6,000 = Rs 1,94,000
Amount received on second call
Due amount on second call = 1,00,000*1 = Rs 1,00,000
Not received on 3,000 shares = 3,000*1 = Rs 3,000
Total amount received on second call = Rs 1,00,000- Rs 3,000 = Rs 97,000
Calculation of share forfeiture
Amount received on application from 4,000 shares = 4000*3 = Rs 12,000
Share forfeiture transferred to Capital Reserve = Rs 6,000 (Rs 12,000-Rs 6,000)